Total Shareholder Return

It is necessary to start from the Total Shareholder Return (TSR) of the Unilever Company that measures the returns received by a shareholder, taking both the increase in share price and the value of dividend income (of course, if to assume that dividends are being re-invested). Thus, Unilever’s TSR performance may be compared with the same group of competitors over a three-year performance term. It is important that this term is being sensitive enough in order to reflect changes, though long enough to smooth out short-period volatility. The return is depicted in American dollars, grounded on the equivalent American dollar share price for NV and PLC. It is necessary to mention that American dollars were selected to enhance comparison with organizations in Unilever’s chosen reference group. The selection of currency impacts the absolute TSR but not the corresponding ranking.

It is essential to mention the fact that Unilever’s TSR goal is to be in the top third of a reference group involving 20 other international consumer goods organizations on a three-year rolling ground. At the end of the year 2006 this company was set on the 13th place, and at the end of the year 2007 the ranking was 6th one. In the year 2007, the following organizations shaped the same peer group of relevant companies (refer the list below):

Thus, the reference group, involving Unilever, contains 21 organizations. Unilever's position is grounded on TSR over a three-year rolling term.

The second company to be analyzed is called Kraft Foods. So lower commodity prices and cost controls were good helpers for other consumer-staples companies beat analyst estimates in current weeks, involving Kellogg Co, Clorox Co and General Mills Inc. They as well came in a bit ahead of muted revenue expectations.

If this direction keeps for the Kraft Company - that is because of show a formal takeover bid for UK confectioner Cadbury by November 9 - it could increase the organization's shares and make for a more compelling proposal. The direction has been for food companies across the board in order to beat the number.

It is important that the Kraft Company is probably to stick by its primary cash and stock offer to Cadbury shareholders that was disclosed on September 7, sources similar to the situation told Reuters. That deal was estimated at 745 pence per share, or 10.2 billion British pounds at the time. The offered bid was worth 733.4 pence, or 10.06 billion pounds Monday afternoon grounded on the reject in Kraft shares. It is considered to be the world's number 2 food-makers; and it is scheduled to post third-quarter earnings after the New York Stock Exchange closes at 4 pm.

It is important to mention the fact that in the past three quarters, the Kraft Company has in fact disappointed analysts concerning revenue, with sales coming in 2 percent, 3 percent and 4,6 percent below everybody’s expectations, in accordance with Thomson Reuters I/B/E/S.

However, earnings per share have been a bit better, with the organization reporting earnings of 4.4 percent more than analysts expected in the second quarter and 13.3 percent more than expectations in the first quarter.

Also, it is necessary to say that Kraft's earnings' report launches almost two weeks after Cadbury reported a 7 percent increase in underlying sales for the third quarter, beating even the greatest forecasts.

One should remember that Kraft Foods Inc. is being the nation's biggest food manufacturer, but it was reported a 13.5 percent drop in third quarter earnings and probable profits for the full-year would be lower than expected due to lofty commodity and energy costs.

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